India’s 89.3% debt-to-GDP ratio (2020) projected by IMF includes both Central and State Government debts

A post is being shared on social media with a claim that the International Monetary Fund (IMF) has projected that India’s debt-to-GDP ratio will be around 89.3 per cent. In the post, the Modi government is being blamed for the debt position. Let’s fact-check the claim made in the post.

Claim: The Modi government is responsible for 89.3 per cent debt-to-GDP ratio projected by the IMF for India.

Fact: India’s 89.3 per cent debt-to-GDP ratio projected by the IMF for the year 2020 includes both the debts of Central Government and State Governments. So, the Modi government (at the Center) and the governments at the State level are both responsible for the debt position. Hence the claim made in the post is MISLEADING.

When we searched about the debt-to-GDP ratio numbers projected by the IMF, they were found in the ‘World Economic Outlook, October 2020: A Long and Difficult Ascent’ and ‘Fiscal Monitor: Policies for the Recovery (October 2020)’ reports published by the IMF. In the reports, we could find that the IMF projected a debt-to-GDP ratio of India for the year 2020 to be 89.3 per cent. Previous years’ debt-to-GDP ratio numbers and the projections till 2025 can be seen here.

In the Statistical Appendix of ‘Fiscal Monitor – October 2020’, it is seen that the ‘Gross Debt’ calculated for India includes both ‘CG’ (Central Government) and ‘SG’ (State Governments). So, the Modi government (at the Center) and the governments at the State level are both responsible for the debt position.

The State Bank of India, in its July 2020 ‘Ecowrap’ document, reported – ‘Given that these higher borrowing are likely to increase gross debt further, our estimated combined debt for FY21 is around Rs 170 lakh crore. Also, since the lockdown related to the pandemic has led to disruption of economic activity, nominal GDP is also likely to contract. This in turn will inflate the debt to GDP ratio to 87.6%. Within this, domestic debt is likely to be around 84% of GDP with component of State’s debt be 27% of GDP.’

In one of the press conferences on the ‘Fiscal Monitor’, the IMF officials have commented on the India’s debt position. The transcript of the press conference can be read here.

To sum it up, the Modi government and the governments at the State level are both responsible for 89.3 per cent debt-to-GDP ratio projected by the IMF for the year 2020.